VIEWPOINT by LORD WOLFSON: Road charges would help to drive growth

One of the reasons we are stuck in recession is that politicians, of all persuasions, struggle with the idea of wealth creation. Most don’t really understand it. Roads are a good example.

Ask any minister: would it be good for the economy if we shut the M1? ‘No’ would be the answer.

But whilst no political leaders advocate shutting roads, few if any can see the enormous potential in building new ones.

Beating the traffic: Satisfying the demand for roads would be self-financing, create jobs, and stimulate the economy, says Lord Wolfson

The car journey from Croydon to Westminster takes 45 minutes if you are lucky. A new ‘Southway’ flyover could get you there in 12 minutes, transforming the economic potential of South London. Most British cities would benefit from similarly ambitious schemes.

Painfully predictable daily traffic jams are testament to colossal pent up demand for new roads. Satisfying that demand would be self-financing, create jobs, and stimulate the economy.

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To those who are worried about the environment, the tried and tested answer is cleaner cars not fewer roads.

So why is the Government doing so little to improve our roads? The answer has much to do with the archaic way in which we pay for them.Most of us think roads are free. In fact, we pay for them indirectly, through fuel tax. But the absence of a clear link between the use of specific roads and fuel tax income means that the State never ties revenues from motorists to its investment in roads.

The tax on a litre of petrol is an astonishing 80p. That raises £25bn in revenue for the Government, but only a fraction of this is reinvested back into roads.

In an age of satellites and mobile communications there is a better way. Fuel taxes should be abolished and replaced with universal road charging.

Overall, motorists must not be charged any more for the current road network – anything less than a firm commitment to this would leave road charging dead in the water.

The effect of rational road charging would be direct investment to where it provided the best return on taxpayer’s money. Crucially, it would also allow new roads to be privately financed; with the revenue generated by that road going to the road-builder.

This would make vast sums of money available for new road projects and ease pressure on Public Sector borrowing.

From the motorist’s point of view, roads would be built where they are needed, rather than where bureaucrats dictate.

Charges could be varied by time of day and type of road. The cheapest roads would be minor roads overnight, the most expensive would be the major arterial roads during rush hour.

Behaviour would quickly adapt and reduce congestion at the busiest times of day. For example, there would be much bigger financial incentives for car sharing on school runs and commutes.

A single monthly bill could collect the charge, similar to ones for mobile phones and credit cards. Of course we would need to be similarly careful to protect data from the prying eyes of the state.

It would be simple to calculate the cost of road works and charge those digging up roads. This would be an incentive for contractors to co-ordinate their activities and get the work done as quickly as possible.

Car theft could be all but eliminated, because cars could be tracked if stolen, or detected if the tracking device were removed.

The problem of uninsured cars and the avoidance of Vehicle Excise Duty would also be eliminated – reducing the cost of insurance and tax for honest car owners.

Radical ideas to kick start the economy, drive growth and improve our quality of life are in pretty short supply. The development of a rational market for roads represents an enormous economic opportunity.

At some point, the overwhelming logic of pay-as-you-go road charging will prevail, and it will be adopted throughout the developed world. We should be brave enough to be the first.